Cash continues to gush in to South Texas banks from local landowners who have leased their land and mineral rights to energy companies.

Finding ways to lend that money, however, remains a challenge for many of the 20 banks based in the counties in the heart of the Eagle Ford Shale.

That's because the banks' key customers, ranchers and farmers who have borrowed from the banks to finance land, equipment and livestock purchases, are now the ones flush with cash and no need to borrow.

The double-whammy of surging deposit growth and tepid loan demand has shrunk banks' loan-to-deposit ratios, squeezed interest income and forced some to find ways to raise capital to avoid running afoul of regulators.

“But right now, the way the markets are, there's not a lot for us to do with the deposits,” he said. “In most cases, we're actually losing money taking customers' deposits. Consumers don't understand that.”

Almost half of the banks based in the Eagle Ford had lent less than a third of their deposits at the end of last year. In Texas, the median loan-to-deposit ratio was 62.3 percent at the end of September, according to SNL Financial of Charlottesville, Va. Nationally, it was 80.6 percent.

“It's hard to make money when you have that little in loans out,” said Bruce Toppin, a San Antonio lawyer who represents community banks on corporate, securities and regulatory-related matters, including some institutions in the Eagle Ford.

Drilling in the enormous oil and gas field in South Texas essentially kicked off in 2009.

Laredo's International Bank of Commerce, by far the largest bank based in the Eagle Ford area, actually registered a decline in the amount it had lent at the end of 2008 compared with the end of 2012.

To be sure, lending hasn't kept pace with deposit growth at institutions across the country. Lenders and borrowers both have been skittish in the wake of the Great Recession. And with the stock market crash of 2008 still fresh in many people's minds, cash has flowed into bank accounts despite the piddly amounts in interest they pay.

The trend, though, is more pronounced in the Eagle Ford.

Deposits at seven of the banks at least doubled. At the Karnes County National Bank in Karnes City, deposits were up more than 200 percent. In the last nine months of last year, its deposits swelled by $55 million while loans grew by about $10 million.

Reflecting its name, Cotulla-based Stockmens National Bank has made loans to ranchers and farmers for more than 100 years. Not so much lately, though.

“Since 2011, most of them had to liquidate all their cattle because of the drought,” said John H. Northcut, Stockmens' chief executive.

While the bank's loan portfolio grew 16 percent over the four years ended Dec. 31, its deposits increased 127 percent. As a result, its loan-to-deposit ratio tumbled by almost half to less than 19 percent on Dec. 31.

“We'd love to be up at 40 percent, but we're struggling ... to get up to 20 (percent),” he said.

Finding borrowers isn't easy.

Most of the big oil companies operating in the Eagle Ford have their own financing sources.

There are lending opportunities for hotel and motel construction, but a lot of those projects are in the $3 million to $4 million range — beyond Stockmens' approximately $1 million loan limit, Northcut said.

“So most of those have gone to the larger banks,” he said.

Stockmens has made loans to contractors building roads and pads.

“But as fast as I make the loan, they pay them off,” he said. For example, a two-year, $800,000 loan he made to finance an equipment purchase was paid off in six months.

Banks could boost their lending by participating with other lenders in other markets, but the risk is they don't know their borrower or the area as well as their own.

Pleasanton-based Atascosa National Bank's deposits have risen 124 percent since the end of 2008, but have grown just 4 percent in that time. Its loan-to-deposit ratio, 12.2 percent on Dec. 31, was the lowest among banks based in the Eagle Ford area. It already was low, 26.3 percent, before the oil play began in earnest in 2009.

“Part of that is our conservative nature,” said Rodney Benad, Atascosa National Bank's chairman, president and CEO. “The one thing that can hurt a bank quicker than anything (is) bad loans.”

He added that a low loan-to-deposit ratio is “not a bad thing. It's just the situation we're in.”

Still, making money has gotten harder. Its net-interest margin — essentially the difference between what it makes lending money and what it pays for deposits — has tumbled by more than half in the last four years to 1.67 percent. That was the lowest among banks based in the Eagle Ford area.

Other South Texas banks have recorded noticeable drops in net-interest margin, too.

At the same time, the surge in deposits has affected the amount of capital banks have to hold to ensure it's enough to honor withdrawals and weather operating losses.

Deposits are listed on a bank's balance sheet as liabilities, so as deposits rise, the institution's owners might have to put up more money — capital — to satisfy regulators' requirements.

Some banks have retained some of their profits, rather than paying them out to shareholders, to increase capital. Karnes County National Bank, meanwhile, sold $5 million in stock last summer to boost its capital.

Atascosa National Bank's Tier 1 leverage ratio, a measure of a bank's capital, fell from 12.75 percent at the end 2008 to 6.7 percent at the end of last year — the second-lowest among South Texas banks.

While still considered well-capitalized, the bank wanted to get the ratio up. So, two months ago, it sold its San Antonio branch to TexStar National Bank of Universal City.

That's “lowered our deposits considerably and raised our capital,” Benad said. Its Tier 1 leverage ratio now stands at closer to 9 percent, he added. The branch had about $14.7 million in deposits as of June 30.

Another solution to the pressures on leverage ratios is for banks to offer nonbanking products, such as brokerage services, wealth management, trust services and the like.

Such offerings, which are not insured by the Federal Deposit Insurance Corp., would allow banks to boost their non-interest income while taking deposits off their books.

San Antonio-based Investment Professionals Inc., which partners with various local banks, is trying to do the same in the Eagle Ford.

“We can come in, work with the bank, put one of our advisers on site at the bank, allow them to be there as a resource for these clients and talk to them about all of their financial needs,” said Jay McAnelly, Investment Professionals' president and CEO.

Many banks, particularly the smaller ones, are reluctant to expand into new business lines they may not be as familiar with, said Toppin, who is with the law firm Rosenthal Pauerstein Sandoloski Agather LLP.

“Some of these banks have just been doing things this way for, in some cases, a hundred years or more, just acting as a traditional commercial bank and making ag loans or small-business loans,” Toppin said. “That's kind of been their niche, and there hasn't really been a great need for anything other than that.”